Sigma board opens books to Aspen

The board of pharmacy distributor
Sigma Pharmaceuticals
has granted South Africa’s Aspen Pharmacare due diligence for the next four weeks, pavig the way for Aspen to make a formal offer.

Major shareholders of the embattled Sigma have called for the board to reject the 60¢ a share takeover bid from Aspen. The board’s decision to let Aspen look over its books suggests the absence of a rival bid and also that Sigma has been unable to negotiate a higher price.

Sigma said it would continue the previously foreshadowed asset sale program, but has agreed not to solicit rival bids for another whole-of-business transaction for the next month, or to enter into contracts in relation to asset sales.

If the Aspen bid falls through, Sigma must sell $100 million of assets by early next year under its new banking covenants.

It is understood the board could use the company’s annual general meeting later this month to convince shareholders to support the deal. Major institutional Sigma shareholders have been unenthused by the 60¢ a share bid, which is a little over half the $1.02 a share price at which the company raised capital from shareholders at in September.

Lazard Asset Management recently increased its stake in the company to almost 10 per cent, and the Sigma board faces the task of convincing shareholders to support the deal if Aspen makes a formal offer.

The value for Aspen also lies in Sigma’s market share and access to Australian pharmacy, which will drive increased sales of its manufactured generic drugs and unlicensed brands.

If the bid is successful, pharmacists are concerned that Aspen could off-load Sigma’s distribution arm to Toll, Woolworths, Wesfarmers via Coles, or Metcash.